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| NEIGHBORHOOD INVESTMENT PROGRAM |
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(A list of frequently asked questions is below)
Description: Tax credits
Purpose: The Neighborhood Investment Program (NIP) increases charitable
giving to local nonprofit organizations. The program allows 501(c)3 designated charitable
organizations to apply for tax credit vouchers. These organizations distribute the vouchers
to contributing businesses and individuals. By donating to approved NIP organizations,
contributors can support their communities and earn credits to reduce certain West Virginia
taxes. 2007 Participant List.
Description: The West Virginia Legislature sets aside $2 million annually
in state tax credits for the NIP. To participate, a 501(c)3 charitable organization must
apply to the West Virginia Development Office. Upon meeting program requirements and obtaining
approval from the NIP Advisory Board, organizations are awarded tax credit vouchers.
Businesses and individuals that contribute to NIP-approved organizations are eligible to
receive up to 50 percent of the contributed amount in the form of state tax credits. Donors
may use the credits to reduce liability for the Corporate Net Income Tax, the Business
Franchise tax or the Personal Income Tax.
Eligible activities: Projects generally eligible for program participation
include but are not limited to the following:
- Health clinics
- Homeless shelters
- Educational programs
- Housing programs
- Preservation/revitalization activities
- Domestic violence shelters
- Children's shelters
- Meal delivery programs
- Senior citizens' centers
- Community foundations
- Scholarship programs
- Hospice care
- Transportation programs
- Day care centers
- Counseling services
- Services for the disabled
Eligible applicants: Tax credit vouchers are awarded to organizations that
are designated as 501(c)3 by the IRS and registered with the West Virginia Secretary of State's
office as charitable organizations. Eligible applicants also must:
- Be community based
- Serve highly distressed neighborhoods or communities
- Serve primarily low-income individuals
- Collaborate with other organizations
- Be novel, creative or unique in approach
- Have a history of maintaining low administrative costs
- Demonstrate the ability to deliver the proposed services
- Demonstrate a strong need for the proposed services
Contact: For additional information about the Neighborhood Investment
Program, please call the West Virginia Development Office at (800) 982-3386 or (304) 558-2001.
Neighborhood Investment Program
(Frequently asked questions)
What is the program timeline? The program is administered according to the state
fiscal year, from July 1 to June 30. To be eligible for tax credit, contributions must be made
after the organization has been approved for participation. A limited number of credits will be
distributed on behalf of each organization. Credits can be distributed by NIP organizations
until the last day of the fiscal year in which their application was approved.
What types of contributions are eligible for tax credit? Contributions can be
in the form of cash, personal property, real estate, stock and in-kind professional services.
What types of professional services are eligible for tax credit? Only services
performed by a lawyer, accountant, West Virginia-licensed architect, doctor or other state-licensed
medical professional (nurse, physician's assistant, etc.) are eligible. These services cannot
account for more than 25 percent of the total contribution by an individual. In other words, the
person providing the services must also make a cash, property or stock contribution equal to three
times his or her in-kind donation. There are other restrictions on the eligibility of professional
in-kind donations; contact the West Virginia Development Office for details.
Is there a minimum and/or maximum contribution amount? Yes. The minimum eligible
donation is $500. The maximum eligible donation is $200,000.
How does a tax credit differ from a tax deduction? A tax deduction reduces the
amount of total income on which taxes are based. A tax credit is used to reduce total tax liability.
Generally, a tax credit is worth substantially more than a tax deduction.
What are the limitations of the credits? There are three primary limitations on
the use of the tax credits:
- The amount of credit allowable must be taken within a five-year period, beginning with the
tax year in which the donation is made.
- A donor may receive no more than $100,000 annually in NIP tax credits.
- A donor cannot use NIP tax credit to reduce total tax liability on any one tax by more than
50 percent annually.
If a donor makes contributions over several years, can the credits overlap? Yes
but the limitations described above still apply.
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